Provident fund data on formal employment in the country

Annual reports from the EPF Organizations

• The Indian government has been utilizing data from the Employees Provident Fund (EPF) scheme since 2017 to monitor payroll employment and formal job creation in the country.

  

• Despite monthly data released through this scheme indicating an increase in the number of contributors, there have been reports of unemployment and job scarcity from various parts of the country, which contradict this.
• According to annual reports from the EPF Organizations (EPFO), the number of regular contributors to the scheme has remained relatively stagnant or even declined in recent years.
• It is important to note that regular contributors are those employees who make PF contributions regularly throughout the year.
• Despite an increase in regular contributors from 30.9 million to 46.3 million between 2012 and 2022, growth has slowed significantly in recent years.
• Between 2017 and 2022, the number of regular contributors increased only from 45.11 million to 46.33 million, despite overall enrollments in the EPF increasing from 210.8 million to 277.4 million.
• This suggests that the majority of enrollments into the EPF are linked to temporary, subcontracted, or casual jobs where PF contributions are irregular or cease shortly.
• As a result, it appears that the Indian economy is creating jobs, but these are not formal, regular, well-paid jobs that can provide long-term employment.

Effect on the middle class

• This dearth of quality jobs is inhibiting the expansion of the middle class and hindering India’s economic growth.

Impacts of the COVID pandemic

• It is worth noting that the stagnation in formal employment can be partially attributed to the pandemic, which caused a decline in EPF contributors.
• The EPFO stopped publishing monthly data on regular contributors after news media highlighted this decline.
• Other sources of formal employment and labour data, such as the employment market information collected by the Directorate General of Employment and Training (DGET), have not been published since 2013.

Way forward

• While the EPF scheme is a potential alternative source to gauge payroll employment, it requires significant standardization and deduplication to provide a more accurate picture of formal job creation in India.
• Moreover, it should be recognized that a single data source is insufficient to understand formal employment and jobs in the country.
• Understanding and addressing issues of job creation or job quality cannot be achieved without a wide range of standardized, stable, and publicly available labour statistics.